State reinsurance program gets reboot

Proposed legislation that state Insurance Commissioner Mike Kreidler says will stabilize the health insurance market is back on track after facing pushback from third-party plan administrators.

Last month, Kreidler’s office proposed legislation — sponsored by Sen. Annette Cleveland, D-Vancouver, and Rep. Eileen Cody, D-Seattle — to create a state reinsurance program. The program would provide partial reimbursement to insurance companies for high-cost medical claims that exceed a certain threshold. The state program was designed to mirror the federal reinsurance program, which expired in 2016, that was part of the Affordable Care Act.

The reinsurance program would be capped at $200 million in payments. Kreidler’s office proposed a fee placed on all health plans — including those covering public employees and self-insured groups using third-party administrators — to pay for the program. Including all plans, Kreidler said, would distribute the cost of the program across a larger group, making the monthly, per-person assessment smaller.

“By being that broad, we lowered the individual assessment way down to like $5 per month,” Kreidler said. “It was spread very broadly, which was something I was very eager to accomplish.”

But the proposed funding mechanism led to problems. Those with third-party administrators — including large corporations such as Microsoft and Boeing and labor unions with trusts — pushed back against the assessment, Kreidler said. The criticism was strong enough to send Kreidler’s office back to the drawing board.

The proposal now excludes third-party administrators, making the monthly assessment to health plans about $7.50 per person, Kreidler said.

That charge could come down further if the state opted to kick in general fund dollars or if the state receives a federal waiver for the program. The state is preparing to apply for about $30 million in federal funding for the program, Kreidler said. Alaska, Minnesota and Oregon have received waivers and operate state reinsurance programs.

But, the longer the bill takes to gain approval, the less time the state has to submit its waiver application, secure funding and notify health insurers before they begin submitting 2019 plan rates in May, Kreidler said.

“We’re still operating under the assumption that we can do a federal waiver at this point,” he said. “We’re still optimistic that it can get pulled together.”